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Please thoroughly show your step by step answer and all your work! 

Jose Vega, corporate financial specialist for Zebe’s Zippy Bikes, has been given the task of funding an account to cover anticipated future warranty costs.  Warranty costs are expected to be $1.5 million per year for five years, with the first cost expected to occur in three years.  

Draw a timeline showing the expected cash outflows.

How much will Jose have to place into an account today earning 10 percent per year to cover these expenses?

Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments